New Delhi. The Advanced Authority for Advance Ruling (AAR) has stated that Goods and Services Tax (GST) is applicable on various recovery of employees. According to this latest decision, notice pay, group insurance and telephone bills will be taxed. It has been clarified in this decision that the employee is liable to pay GST on the salary received by the employee during the notice period.
AAR has said this during the hearing of a case related to Bharat Oman Refineries, a subsidiary of Bharat Petroleum.
What does ‘recovery’ mean?
According to a report in Business Today, the decision of AAR states that GST will be applicable on individual recovery of employees. Here recovery can mean telephone bill paid by the company, group insurance money etc. The money paid by the company for the insurance of the employees and the salary is given in the notice period may also attract GST.
Supply of Services Case.
If we look at the definition of Goods and Services Tax (GST), then this matter can be very clear. The government charges GST on every work or service in which it sees the matter of ‘supply of services’. Here the meaning of supply of services is to provide service. GST will be levied on the work or service in which the service is being provided. This service can be both direct or indirect.
For whom is the rule
According to different media reports, it has been said in the decision that the employees who are leaving the company without completing the notice period, their notice payment recovery may be levied. Here notice period means the period mentioned in the contract letter, which has to be served before leaving the company. If the company has given 3 months time in the contract letter and you leave the job after serving a month’s notice, then GST can be charged on the salary of the notice period.
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